German shares also soared. In Frankfurt, the X-DAX index opened with a gain of 1.9 per cent to 4,961.82 points. And in Paris, the CAC 40 index opened 1.38 per cent higher at 4,128.56 points.

Wall Street closed two per cent higher overnight, led upwards by the financial and technology sectors, after US Federal Reserve Chairman Alan Greenspan voiced his hopes for reform of the financial sector.

Greenspan told the US Senate Banking Committee that he favoured the removal of Barriers separating banking, insurance and equities firms.

European shares were also rose sharply as confidence returned to the embattled banking sector, which has seen share prices tumble on recent concern over financial crisis in Asia, Russia and LatinAmerica.

Strong end-of-year results from British bank Lloyds TSB, which reported a 14-per cent rise in pre-tax profits in 1998, gave hope to the financial sector after a tur bulent year.

The group said that it had no serious exposure to the financial collapse in Asia and Russia last year and that its investments in Brazil were largely in local currency.

Analysts said that the results suggested that other British banks, which will begin reporting financial results in the coming sessions, may also publish robust financial statements.

At Schroder Securities, Mike Trippitt said: ``This is not just good news for Lloyds but good news for all the banks going into the results season.''Meanwhile, Thai shares surged 10.8 per cent Friday after the upper house approved the final reading of a bankcrupty court bill and a major bank announced a recapitalisation drive, analysts said. The stock exchange of Thailand (SET) composite index soared 33.78 points to close at 347.43 points, while the select SET 50 added 2.9points to close at 25.26 points.

Taiwan shares to post more gains after Lunar Year

Taiwan share prices are expected to rise when the market reopens after a nine-day Lunar New Year break, after posting sharp gains over a holiday-shortened week, dealers said Friday. The Taiwan Stock Exchange weighted price index rose 323.21 points, or 5.9 per cent, to close at 5,798.00 Wednesday, after a hefty 8.5-per cent plunge in the previous week.

The index is expected to rise to the 6,300-point level when it reopens on February 20 after a nine-day holiday for the Chinese new year, extending a technical rebound following recent sharp falls, analysts said. ``The bourse has fallen too deep,'' said Clement Lou, manager of Taiwan International Securities.

``There will be rebounds for companies with not-too-bad earning reports. Some stocks may go up 30 per cent,'' Lou said. All the listed firms are required to unveil their 1998 earning reports by the end of April.

Taiwan's stock market has moved downward sincethe start of this year due to weak investor confidence amid concerns over financial difficulties at local companies.